2017 challenges and trends for cross-border payments
Trade is the life blood of civilizations and its flow has gone only smoother and faster with better infrastructure. One area that is drawing attention in 2017 is cross-border payments. Several factors are bringing this topic forward. Firstly, more consumers are traveling overseas markets and buying goods to bring home. Second, consumers are discovering the convenience of buying overseas from the comfort of their home. In both cases, this is highlighting the issue of cross-border payments in order to facilitate commerce.
So cross-border transactions across Asia are definitely on the horizon said Eli Shoshani (photo left), Head of Payments Business Development at D+H.
“Banks are looking to compete with money transfer services such as Western Union and MoneyGram by offering low value cross -border payments facilitation. At the moment the more practical solution to enable cross-border transactions appears to be bilateral links between banks in countries, e.g. Australia to India, Middle East to India,” he explained.
Another factor impacting cross-border payments is the mobility of migrant workers. Thailand’s Bank of Ayudhya, for example, plans to offer cross-border payments in Myanmar as it targets Myanmar workers in Thailand. Similarly Thai bank, Kasikornbank (Kbank) will launch its own cross border payment system targeting Cambodia, Laos, Vietnam and Myanmar. According to RFi Group, data in the second half of 2016 from the Thailand Retail Banking Council shows that 24% of those who hold overseas banking products in Thailand do so for remittance purposes.
Shoshani predicts more digital disruption including e-wallet type services. Real-time payments may help banks claim back some of this business from third parties, by not only providing the same level of real-time service, but also utilizing the intelligence and capabilities that banks inherently have that third parties may not, such as access to fraud and security checks and richer transaction data.
“A side-effect of gaining back the market share taken by e-wallets and the like, is the fact that banks will have more liquidity left in the banking system which they will have control of,” he added.
Death of banks exaggerated
In 2017 banks will find themselves facing competition from every angle: from products like cards, savings, loans, checking, investments and insurance; to competitors: incumbent banks, insurance, investment firms, telcos, convenience stores, remittance companies and third party technology providers.
Shoshani cautioned, however, banks to remember that many of these third party vendors and offerings could not exist without the core services that the bank itself provides.
“Banks need to understand how these new innovations can enhance their own service offerings, whilst also ensuring that they keep innovating at the same time,” he opined.